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I have obtained a copy of an email that the Congressional Budget Office just sent to “interested Hill staff,” stating that, “beginning immediately, legislation to repeal the CLASS provisions in current law would be estimated as having no budgetary impact.” This clears the way for CLASS to be quickly repealed by Congress, because Congress won’t have to find offsetting budget cuts for CLASS’ mythical “savings.”

CLASS, you will recall, is the Obamacare long-term care entitlement that was known by all parties to be a fiscal time bomb, due to a structure that is designed to create an adverse selection death spiral in which only sick people use the program, driving up premiums and making them unaffordable and/or requiring a taxpayer bailout.

This news also has strategic importance for overall repeal of Obamacare. As I discussed on Friday, the CBO scored the Patient Protection and Affordable Care Act as reducing the deficit by $210 billion in the years 2012-2021. $86 billion of these savings comes from CLASS, because the program takes in premiums for five years, before it pays out claims, thereby making the program appear to be “deficit-reducing” in the near term.

As a result of the new CBO score, PPACA’s alleged deficit savings are now $124 billion in the 2012-2021 timeframe, a meaningfully more manageable number, given that the reconciliation process will need to be used to repeal the law under a Republican President. Even this number is fudgy, as I describe in detail in this post, but the CBO’s view is of significant importance in Congress.

The full email from the Congressional Budget Office (emphasis added):

To Interested Hill staff:

On Friday, the Secretary of Health and Human Services (HHS) announced that the department does not plan to implement the Community Living Assistance Services and Supports (CLASS) long-term care insurance program under current law. Therefore, in its next baseline budget projections (which will be issued in January), CBO will assume that the program will not be implemented (unless there are changes in law or other actions by the Administration that would supersede Friday's announcement).

Furthermore, following longstanding procedures, CBO takes new administrative actions into account when analyzing legislation being considered by the Congress---even if it has not published new baseline projections. Beginning immediately, therefore, legislation to repeal the CLASS provisions in current law would be estimated as having no budgetary impact.

UPDATE 2: I've added a set of links to all of my work on CLASS on the right-hand column of The Apothecary's main page. Go to the "Hot Topics" section below the orange RSS logo.

UPDATE 3: Julian Pecquet of The Hill , in an informative piece, quotes White House spokesman Nick Papas as declaring, "We do not support repeal. Repealing the CLASS Act isn't necessary or productive. What we should be doing is working together to address the long-term care challenges we face in this country."

Pecquet also writes that "an administration official called CLASS Act advocates to reassure them that Obama is still committed to making the program work. That official also told advocates that widespread media reports on the program's demise were wrong, leaving advocates scratching their heads."

AARP says they're "disappointed" at the administration's "premature" actions. Larry Minnix, CEO of a lobbying group called Advance CLASS, has the best quote of all: "I feel like somebody just called me about how to do really good pet care after they shot my dog."

Former Ted Kennedy aide and CLASS architect Connie Garner also works for Advance CLASS now. She says that CLASS' advocates have been receiving "what feels like disingenuous feedback for a while" from the Obama Administration.

Bob Yee, the former CLASS actuary whose departing e-mail gave us the first indication that the Administration was throwing in the towel, told Pecquet that he felt vindicated by the announcement. "I don't know why they sort of scrambled and said they weren't shutting down. In fact, as is proven now, they're not working on [CLASS]."

I'll give Judy Feder, a left-wing health policy analyst at Georgetown, the last word. "When I look at their decisions," says Feder, "what they seem to be lacking is guts."

UPDATE 4: Philip Klein and his colleagues at the Washington Examiner have put together this set of video clips of Democratic assurances of the CLASS Act's soundness: